A new office aimed at bolstering Louisiana's efforts to collect state government's back-owed debts will be up and running by January, able to revoke licenses, seize bank accounts and take tax refunds to help pay down delinquent accounts.
BATON ROUGE, La. (AP) — A new office aimed at bolstering Louisiana's efforts to collect state government's back-owed debts will be up and running by January, able to revoke licenses, seize bank accounts and take tax refunds to help pay down delinquent accounts.
Lawmakers established the Office of Debt Recovery in the last legislative session, seeking to generate new money for the state treasury after six years of budget cuts. Revenue Secretary Tim Barfield updated officials Thursday on his department's progress in building the office, saying the collection work will begin in phases and be complete by early 2015.
Agencies will be required to refer all their delinquent accounts to either the attorney general's office or the new debt recovery office for collection. The Office of Debt Recovery will handle debts considered final with no further right of appeal, and agencies will have to refer the accounts quickly, once they are 60 days old.
"The quicker you report debt, the better chance you have of recovering debt," Barfield told the Cash Management Review Board.
Louisiana's delinquent accounts reached $1.4 billion in a recent tally. Supporters of the change in handling debt collection say it strengthens a focus on seeking payment and gives the state more tools to force it.
The state has 174 agencies — and until now, no unified collection system to handle all state government debts. The attorney general's office collected back-owed debt for 43 agencies that have contracts with them directly. But such contracts weren't required.
The law provides a few exemptions.
The recovery office won't handle collection efforts for agencies that have agreements for the attorney general's office to do the work. It also won't handle debts owed to federal social services programs or back-owed unemployment compensation, which falls under another collection process.
Under the law, the Office of Debt Recovery has the authority to revoke and suspend state-issued licenses, offset tax refunds, intercept accounts payable and take dollars from some bank accounts to pay off debts.
"Those are pretty strong tools," said Treasurer John Kennedy, chairman of the review board.
Barfield highlighted the new ability to seize money from bank accounts to address a delinquent account. His department is working to sign up individual financial institutions that are willing to agree to such seizures.
Different collection methods will be used depending on the type of debt involved, however. For example, Barfield said he doesn't expect to use bank account seizures for health care bills involving charity hospital care for the poor and uninsured.
A contractor that looked at improving Louisiana's debt collection efforts estimated the state could bring in an extra $150 million to $200 million within five years using methods included in the law.
Barfield cautioned against expecting too much too soon.
"It's going to take us awhile to get to that run rate," he said in an interview.
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